House Passes Debt Ceiling Bill

WASHINGTON -- The House of Representatives has voted 269-161 to pass a bill that would raise the nation's debt limit while cutting trillions of dollars from federal spending.

The plan -- which was finally agreed upon Sunday evening after weeks of tense negotiations -- would raise the $14.3 trillion federal debt ceiling by another $2.4 trillion, while cutting federal spending by at least $1.5 trillion.

The House chamber erupted in applause during the vote as Rep. Gabrielle Giffords (D-Ariz.) walked in to cast a "yes" vote. Giffords was shot in the head during a political event in January, but appeared in good health as her colleagues hugged and kissed her Monday evening on the House floor.

The bill would initially increase the debt limit by $400 billion and establish procedures to allow the limit to be raised further in two steps for a total increase of $2.4 trillion. That's enough for the nation to meet its debt obligations through the beginning of 2013.

Democrats had sought a plan that would include no cuts to Medicare, Medicaid, or Social Security, but the final deal wouldn't shield Medicare from cuts.

The bill would create a new 12-member joint committee that will be charged with agreeing on $1.5 trillion additional in cuts over 10 years and presenting it to Congress by Nov. 23. Congress would be required to vote on the proposal by Dec. 23.

If the committee can't agree on what to cut, then automatic cuts of as much as $1.2 trillion would kick in in 2013, half of which would come from defense spending, and the other half would come from domestic spending.

If the special committee fails to identify agreed-upon cuts, then automatic cuts would likely target Medicare, and providers would be the prime target. Under the bill, any potential Medicare cuts wouldn't come from charging beneficiaries more; rather, the savings would come from paying providers -- doctors and hospitals -- less for treating Medicare patients.

Although President Obama and top Democrats had been pushing for a "balanced" deal that included tax increases in addition to cuts, no tax increases were included in the final bill. However, the special committee could decide to implement tax reform and that could include raising taxes.

"I'm not happy with it, but I'm proud of some of the accomplishments in it and that's why I'm voting for it," Minority Leader Nancy Pelosi (D-Calif.) said of the bill on the House floor before Monday evening's vote.

Republicans, meanwhile, lauded the compromise, even though they had to make some concessions as well, including smaller total cuts in spending than they wanted, and the potential that the special committee may recommend tax hikes.

Rep. David Drier (R-Calif.) called the bill a "tremendous achievement that will have a lasting achievement on our economy."

In the health policy community, opponents of the plan pointed to the fact that Medicare already reimburses less than private insurers, and that doctors are already facing a 30% cut in their reimbursement come Jan. 1.

Theodore Marmor, a Medicare expert and adjunct public policy professor at Yale, said that while he thinks Medicare reimbursements should not be cut across the board, he'd support looking at certain services that are reimbursed at much higher rates than they are in other countries.

"Doctors should expect different adjustments, depending on whether the fee schedule is already too high or too low," he said in an email to MedPage Today and ABC News. "American doctors cannot broadly back out of Medicare patients but they deserve to be at the bargaining table, which they are in most modern democracies."

Anticipating being the target of future cuts, the Federation of American Hospitals voiced its disapproval of the plan even before the House took a vote.

"We appreciate the pressing fiscal need to reduce the federal deficit and raise the national debt ceiling," said Chip Kahn, CEO of the Federation of American Hospitals in a press release sent Monday afternoon. "However, we cannot support the Budget Control Act of 2011 because it sets in motion billions of dollars in arbitrary Medicare funding cuts. Arbitrary hospital payment reductions imposed for fiscal reasons are unwise and will impact caregivers and the beneficiaries they serve alike."

The Senate is scheduled to take up the measure Tuesday, which is the very last day it could pass the bill to prevent the nation from defaulting on its loans. The U.S. Treasury said it will run out of money needed to pay off the nation's loans at midnight on Tuesday.

The president, who worked for weeks to secure the deal, said Monday evening that he'd sign the bill when it comes his desk.

Healthcare stocks -- including those in drugs, devices, and home healthcare -- fell Monday in anticipation of passage of the bill.

This article was developed in collaboration with ABC News.

Reviewed by Zalman S. Agus, MD Emeritus Professor University of Pennsylvania School of Medicine

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